<PAGE>
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND ANNUAL REPORT
AND BJB INTERNATIONAL EQUITY FUND OCTOBER 31, 1997
- -------------------------------------------------------------------------------
Dear Fellow Shareholder:
Once again, I am pleased to offer reports from the Fund's investment
advisors on the performance of the BJB Global Income Fund ('Income Fund') and
The BJB International Equity Fund ('Equity Fund') for the recently completed
fiscal year. The Income Fund provided a positive return of 3.24%, somewhat
underperforming its benchmark, as detailed in the following section. The Equity
Fund, on the other hand, outperformed both its benchmark and the average
competitor, to return 17.68% for the period.
BJB GLOBAL INCOME FUND
For the twelve months period ended October 31, 1997 the BJB Global Income
Fund returned 3.24%, which compares to 5.78% on a blended index (the 'Index')
consisting of 50% of the Salomon Brothers 3-7 Year World Government Bond Index
and 50% of the Lehman Brothers Intermediate/Corporate Index. Underperformance is
attributable to the Income Fund's cautious investment approach adopted across
all markets since the start of 1997. This was especially true in the U.S.
market, which over the period performed particularly well. Low levels of return
for the Income Fund were also attributable to the appreciation of the U.S.
dollar versus the Deutsche Mark and Yen.
The period under review was characterized by generally buoyant conditions in
the global bond markets, with the U.S. market displaying a particularly strong
upward trend. Japanese bond exposure in the portfolio remained below Index
level, while the European allocation was correspondingly overweighed. Exposure
to the peripheral European bond markets was maintained at higher than Index
levels, in anticipation of a broad based monetary union and continued
convergence in the interest rate structure within Europe. Market recognition of
this has resulted in the systematic outperformance of these markets thus far
this year.
In the United States, yields declined as the market took the recipe of
strong growth but still low inflation to mean that the Federal Reserve would not
need to raise short term interest rates. Elsewhere within the dollar-bloc
markets, Australian yields continued to decline as the slow growth in the
domestic economy and the very low levels of inflation allowed the Reserve Bank
of Australia the scope to lower interest rates.
In Japan, yields also declined. The resulting slowdown in the domestic
economy from the rise in consumption tax and the potential negative impact on
exports of slowing growth in Asia, supported bond yields. The period of
ultra-low interest rates seems unlikely to be altered for some considerable
time. Thus, although the bond market remains expensive on traditional valuation
measures, it may be some time before the bond market corrects and interest rates
normalize.
The theme within Europe has been further movement towards the completion of
the single European currency project. Bond yields have continued to decline in
the peripheral markets, while in Germany, the Bundesbank raised short term
interest rates for the first time in five years.
For much of the period the prospects for the U.S. dollar appeared favorable.
However, signs of faster economic growth and a rise in German interest rates saw
the U.S. dollar correct from its best levels versus the Deutsche Mark.
Similarly, after a period of rapid appreciation versus the Japanese Yen, the
dollar reversed sharply, before ending the period on an upward path.
The outlook for global economic growth for the remainder of 1997 and well
into 1998 is still favorable, but has been tempered by the recent turmoil in
Asian economies. The U.S. economy still appears to be expanding at an above
trend rate, but inflation remains subdued. Nonetheless, with unemployment at an
exceptionally low level and capacity utilization rising, the Federal Reserve may
still have a bias to tighten credit. Until the impact of the Asian slowdown is
more fully absorbed, however, any tightening is likely to be postponed. In
Europe, a progressive acceleration in economic activity is anticipated. Easy
monetary conditions and competitive exchange rates are likely to dominate
restrictive fiscal policies. The peripheral markets should continue to perform
well as investor optimism surrounding the single currency intensifies.
<PAGE>
BJB INTERNATIONAL EQUITY FUND
For the second year in a row, the BJB International Equity Fund has strongly
outperformed both the MSCI EAFE Index and our average competitor over the 6- and
12-month periods ending October 31, 1997. The Equity Fund returned 5.92% for the
past 6 months and 17.68% over the past 12 months versus MSCI EAFE returns of
3.01% and 4.63% over comparable periods. Returns for the Lipper International
Equity Fund Index, a reasonable proxy for our competitors, were 4.23% and 13.34%
respectively.
The Equity Fund's performance results can, in part, be attributed to the
Adviser's strategy to emphasize continental Europe and emerging markets at the
expense of Japan and to hedge a portion of the Fund's European and Japanese
currency exposure. We continue to believe Continental European companies will
benefit from economic recovery, corporate restructuring, and consolidation in
several industries as a natural response to the planned European Monetary Union.
In Japan we avoided financials and restricted investments to global and export-
oriented companies, and to domestic names that were not overly-cyclical.
Late in this fiscal year, we witnessed two major trends being reversed: The
strength of the dollar against the European currencies, and the bull market in
Emerging markets, especially in Asia and Latin America. The heightened
volatility required some active management and some quick reallocation. As of
October 31, our holdings in emerging Asia and Latin America were below 2%, and
only 7% of the European positions were hedged.
Emerging markets experienced severe corrections in recent months. The
currency devaluation in many South East Asian countries such as Indonesia,
Malaysia, and Thailand led to sharp declines in their local markets and in those
of other emerging markets as well. In U.S. dollar terms, the stock markets of
the countries that have devalued their currencies were down as much as 60-70%
from their highs while those that investors fear may devalue were down as much
as 30-40%:
<TABLE>
<CAPTION>
COUNTRIES THAT HAVE DEVALUED COUNTRIES FEARED TO DEVALUE
- ------------------------------------------------ ------------------------------------------------
% DOWN FROM % DOWN FROM
HIGH HIGH
----------- -----------
<S> <C> <C> <C>
INDONESIA -60% ARGENTINA -28%
MALAYSIA -63% BRAZIL -35%
THAILAND -72% HONG KONG -46%
MEXICO -28%
</TABLE>
The problem of emerging markets is a combination of excessive corporate
leverage, hard currency borrowing--mainly in U.S. dollars--and inflated
property prices--mainly in Asia. Of those, the over-reliance on hard currency
borrowing in order to save interest cost is the most lethal error that continues
to haunt companies in emerging markets. This over-reliance on borrowing in
foreign currency represents, we believe, serious financial mismanagement.
We have been significantly underweight in Japan this past year. In general,
Japanese management's track record of poor profitability makes us question their
concern for minority shareholders. In a recent report on Korea, which borrowed
its economic blue print from Japan, sheds some light on our analysis of Japanese
corporate profitability: 'Aggressive expansion with little regard to return on
assets is revealed in the stark statistic that the top 49 Chaebol made only some
U.S. $65 million net profits in 1996, although sales accounted for 96% of
GDP.'(1) However, there are signs that the government is finally planning to
realistically confront the financial crisis that has been burdening the Japanese
economy for many years. December 16, 1997 is a very crucial date for now--the
government is expected to announce specific plans to salvage the ailing
financial system.
(1) Report comment from Goldman Sachs
2
<PAGE>
We increased our exposure to Europe in recent months. Before the outbreak of
the Asian problems, we had many investments in corporations with geographically
diversified sales and sustainable competitive advantages. We believe that, in
this new world order of lower trade-barriers and increased competition,
corporations with market leadership and premium products will succeed and
prosper. But in the current distressed situation in emerging markets global
exposure may be a liability. Economic slowdown in those regions will negatively
affect earnings of global companies. We have therefore been redeploying some of
our investments into European companies that have significant domestic
operations, are undergoing aggressive restructuring, and belong to an industry
that is expected to consolidate ahead of European Monetary Union.
The Asian currency crisis has caused significant corrections in all major
equity markets, as it has heightened the fears of earnings disappointment.
However, reduced growth forecasts have allowed inflation expectations and bond
yields to fall. Lower interest rates provide some support to current stock
market valuations. We believe European corporate earnings will be reasonably
resilient, and therefore the prospects for European equities remain attractive.
As shareholders are aware, the end of our fiscal year coincided with a
period of considerable turmoil in the world's equity markets and while the U.S.
stock markets have since regained the ground lost, that is not true in many
other countries. The International Equity Fund was invested at below index
levels in some of the markets that were hard hit, and not at all in others, but
nevertheless suffered some losses in the turmoil. We remain confident in the
outlook and thank shareholders for their continued support.
After the close of the period, Avril Griffiths, the manager of the BJB
Global Income Fund tendered her resignation from that position in anticipation
of her planned departure from Julius Baer Investment Management (JBIM), the
Advisor. The Management wishes to thank her for her dedication to the Fund over
the past several years. We are pleased to announce that Glen Wisher of JBIM, who
has been assisting Ms. Griffiths in the management of the Fund, will succeed her
as Manager effective January 31, 1998. Mr. Wisher has been a portfolio manager
at Julius Baer Investment Management Inc. since joining the firm in June of 1995
from S.G. Warburg where he had been Director of their Debt Syndication Division.
Mr. Wisher has nine years experience in fixed income sales and portfolio
management and has a law degree from Nottingham University.
Yours sincerely,
/s/ David E. Bodner
David E. Bodner
President
December 10, 1997
The views expressed in this shareholder letter reflect those of the President of
the Fund only through the end of the period covered by the report as stated on
the cover. The President's views are subject to change based on market and other
conditions.
3
<PAGE>
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
- --------------------------------------------------------------------------------
It is the Income Fund's policy to declare and pay monthly dividends from
its net investment income and distribute net realized capital gains, if any,
annually.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN* (UNAUDITED)
- ---------------------------------------------------------------------------------
<S> <C>
Year Ended 10/31/97.............................................................. 3.24%
Five Years Ended 10/31/97........................................................ 5.83%
Inception (7/1/92) through 10/31/97.............................................. 6.40%
</TABLE>
- ------------------
* All average annual total return figures shown reflect the reinvestment of
dividends and capital gains distributions. The Income Fund commenced
operations on July 1, 1992 and the service providers waived their advisory,
sub-advisory and administration fees from 7/1/92 to 10/31/92; without such
waivers and reimbursements, total returns would have been lower.
[CHART]
Growth of $10,000 invested in
shares of BJB Global Income Fund
vs. a Blended Lehman Brothers and Salomon Brothers Index
July 1, 1992-October 31, 1997+
BJB INCOME FUND
Fund Combined
Solomon & Lehman
a b
July 1992 10,000 10,000
Oct 1992 10,486 10,314
Apr 1993 10,781 10,987
Oct 1993 11,341 11,546
Apr 1994 11,018 11,331
Oct 1994 10,939 11,538
Apr 1995 11,690 12,622
Oct 1995 12,460 13,327
Apr 1996 12,755 13,354
Oct 1996 13,488 14,075
Apr 1997 13,385 13,878
Oct 1997 13,925 14,889
Oct 1996
13,925 14,889
- ------------------
+ Hypothetical illustration of $10,000 invested on July 1, 1992 assuming
reinvestment of dividends and capital gains distributions through October 31,
1997. This period was one in which stock and bond prices fluctuated and the
results should not be considered as a representation of the dividend income
or capital gain or loss which may be realized from an investment in the
Income Fund today. No adjustment has been made for shareholder tax liability
on dividends or capital gains distributions. The benchmark index for
performance comparison consists of 50% of the Salomon Brothers 3-7 Year
World Government Bond Index and 50% of the Lehman Brothers Intermediate
Government/Corporate Index. NOTE: All figures cited here and on the
following pages represent past performance of the Income Fund and do not
guarantee future results. Investment return and principal value of an
investment will fluctuate so that an investor's shares upon redemption
may be worth more or less than their original cost.
4
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
It is the Equity Fund's policy to declare and pay annual dividends from its
net investment income and distribute net realized capital gains, if any,
annually.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN* (UNAUDITED)
- ---------------------------------------------------------------------------------
<S> <C>
Year Ended 10/31/97.............................................................. 17.68%
Inception (10/4/93) through 10/31/97............................................. 2.90%
</TABLE>
- ------------------
* All average annual total return figures shown reflect the reinvestment of
dividends and capital gains distributions. The Equity Fund commenced
operations on October 4, 1993. Total returns for the Fund reflect expenses,
waived and reimbursed, if applicable, by the Advisor and/or Administrator.
Without such waivers and reimbursements, total returns would have been lower.
[CHART]
Growth of $10,000 invested in
shares of BJB International Equity Fund
vs. Morgan Stanley EAFE Index
October 4, 1993-October 31, 1997+
BJB International Equity Fund
International Equity Morgan Stanley
Oct 1993 10,000 10,000
Apr 1994 9,608 10,798
Oct 1994 9,440 11,261
Apr 1995 7,970 11,401
Oct 1995 8,462 11,219
Apr 1996 9,281 12,701
Oct 1996 9,540 12,394
Apr 1997 10,592 12,588
Oct 1997 11,227 12,968
- ------------------
+ Hypothetical illustration of $10,000 invested on October 4, 1993 assuming
reinvestment of dividends and capital gains distributions through October 31,
1997.
This period was one in which stock and bond prices fluctuated and the results
should not be considered as a representation of dividend income or capital
gain or loss which may be realized from an investment in the Equity Fund
today. No adjustment has been made for shareholder tax liability on dividends
or capital gains distributions. The Morgan Stanley EAFE Index is a composite
portfolio consisting of equity total returns for the countries of Europe,
Australia, New Zealand and countries in the Far East, weighted based on each
country's gross domestic product.
NOTE: All figures cited here and on the following pages represent past
performance of the Equity Fund and do not guarantee future results. Investment
return and principal value of an investment will fluctuate so that an
investor's shares upon redemption may be worth more or less than their
original cost.
5
<PAGE>
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1997
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
FACE VALUE
CURRENCY VALUE (NOTE 1)
- --------- ------------- -----------
<S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS -- 48.4%
Federal Home Loan Mortgage Corporation,
USD 195,000 6.750% due 5/30/2006.............................................................. $ 201,923
Federal National Mortgage Association:
USD 1,000,000 5.300% due 12/10/1998............................................................. 996,300
USD 650,000 6.250% due 8/12/2003.............................................................. 647,790
AUD 130,000 6.375% due 8/15/2007.............................................................. 92,631
Government National Mortgage Association (Pass Through):
USD 797,974 7.500% due 9/15/2025.............................................................. 816,053
USD 976,362 8.000% due 10/15/2026............................................................. 1,013,433
U.S. Treasury Inflation Indexed Notes:
USD 440,000 3.625% due 7/15/2002.............................................................. 441,927
USD 440,000 3.375% due 1/15/2007.............................................................. 435,600
U.S. Treasury Notes:
USD 800,000 5.750% due 8/15/2003.............................................................. 796,472
USD 300,000 6.500% due 10/15/2006............................................................. 311,508
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS (COST $5,631,005)............................... 5,753,637
-----------
FOREIGN GOVERNMENT BONDS -- 37.2%
GERMANY -- 7.4%
Deutschland BundesRepublic:
DEM 950,000 6.000% due 7/04/2007.............................................................. 567,304
DEM 525,000 6.500% due 7/04/2027.............................................................. 316,854
-----------
884,158
-----------
ITALY -- 7.3%
Government of Italy:
ITL 310,000,000 10.500% due 4/15/1998............................................................. 185,597
ITL 230,000,000 10.500% due 7/15/1998............................................................. 139,534
ITL 170,000,000 10.500% due 11/01/1998............................................................ 104,679
ITL 110,000,000 7.750% due 9/15/2001.............................................................. 69,468
ITL 300,000,000 8.500% due 4/01/2004.............................................................. 200,030
ITL 240,000,000 9.500% due 1/01/2005.............................................................. 168,949
-----------
868,257
-----------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1997
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
FACE VALUE
CURRENCY VALUE (NOTE 1)
- --------- ------------- -----------
<S> <C> <C> <C>
FOREIGN GOVERNMENT BONDS -- CONTINUED
AUSTRALIA -- 5.1%
Government of Australia:
AUD 340,000 10.000% due 2/15/2006............................................................. $ 301,487
AUD 320,000 10.000% due 10/15/2007............................................................ 291,634
-----------
593,121
-----------
DENMARK -- 4.2%
Kingdom of Denmark:
DKK 2,240,000 7.000% due 12/15/2004............................................................. 363,601
DKK 870,000 7.000% due 11/10/2024............................................................. 138,463
-----------
502,064
-----------
SWEDEN -- 3.9%
Kingdom of Sweden:
SEK 900,000 10.250% due 5/05/2000............................................................. 132,864
SEK 1,000,000 13.000% due 6/15/2001............................................................. 164,171
SEK 1,200,000 6.500% due 10/25/2006............................................................. 161,585
-----------
458,620
-----------
CANADA -- 3.4%
Province of Alberta,
USD 400,000 7.625% due 11/05/1998............................................................. 406,600
-----------
UNITED KINGDOM -- 2.6%
United Kingdom Gilts:
GBP 30,000 9.000% due 10/13/2008............................................................. 59,971
GBP 130,000 8.000% due 12/07/2015............................................................. 252,649
-----------
312,620
-----------
NEW ZEALAND -- 2.1%
New Zealand Government,
NZD 400,000 5.850% due 11/05/1997............................................................. 248,811
-----------
SPAIN -- 1.2%
Government of Spain,
ESP 19,400,000 7.900% due 2/28/2002.............................................................. 145,693
-----------
TOTAL FOREIGN GOVERNMENT BONDS (COST $4,387,425).................................. 4,419,944
-----------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1997
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
FACE VALUE
CURRENCY VALUE (NOTE 1)
- --------- ------------- -----------
<S> <C> <C> <C>
CORPORATE BONDS -- 11.1%
UNITED STATES -- 6.3%
Associates Corp of North America,
USD 300,000 7.375% due 6/11/2007.............................................................. $ 314,400
General Electric Capital Corp.,
USD 370,000 8.625% due 6/15/2008.............................................................. 436,193
-----------
750,593
-----------
GERMANY -- 3.1%
Bayerische Landesbank,
USD 360,000 6.625% due 6/25/2007.............................................................. 369,360
-----------
UNITED KINGDOM -- 1.7%
Puma Finance,
USD 200,000 5.848% due 10/27/2029............................................................. 200,000
-----------
TOTAL CORPORATE BONDS (COST $1,285,614)........................................... 1,319,953
-----------
ASSET-BACKED SECURITIES -- 1.2%
UNITED STATES -- 1.2%
Toyota Auto Receivables Grantor Trust Series 1996-A,
USD 138,404 6.300% due 7/20/2001 (Cost $138,402).............................................. 139,183
-----------
REPURCHASE AGREEMENTS -- 0.2%
UNITED STATES -- 0.2%
USD 27,110 Investors Bank & Trust Company Repurchase Agreement, dated 10/31/1997, due
11/03/97, with a maturity value of $27,121 and an effective yield of 5.250%,
collateralized by a Federal Home Loan Mortgage Corporation Obligation, with a rate
of 6.104%, a maturity date of 6/15/2023, and a market value of $28,482 (at
amortized cost)................................................................... 27,110
-----------
TOTAL INVESTMENTS -- 98.1% (COST $11,469,556)*.................................... 11,659,827
OTHER ASSETS AND LIABILITIES (NET) -- 1.9%........................................ 229,528
-----------
NET ASSETS -- 100.0%.............................................................. $11,889,355
-----------
-----------
</TABLE>
------------------
* Aggregate cost for federal income tax purposes.
See Notes to Financial Statements.
8
<PAGE>
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
SCHEDULE OF FORWARD FOREIGN EXCHANGE CONTRACTS
OCTOBER 31, 1997
FORWARD FOREIGN EXCHANGE CONTRACTS TO BUY
<TABLE>
<CAPTION>
CONTRACTS TO RECEIVE
---------------------------------
EXPIRATION LOCAL VALUE IN IN EXCHANGE NET UNREALIZED
DATE CURRENCY USD FOR USD (DEPRECIATION)
- ---------- -------------------- -------- ----------- --------------
<S> <C> <C> <C> <C>
11/04/97 JPY 49,340,612 410,398 411,172 $ (774)
--------------
Net unrealized depreciation on forward foreign
exchange contracts................................ $ (774)
--------------
--------------
</TABLE>
FORWARD FOREIGN EXCHANGE CONTRACTS TO SELL
<TABLE>
<CAPTION>
CONTRACTS TO DELIVER
--------------------------------- NET UNREALIZED
EXPIRATION LOCAL VALUE IN IN EXCHANGE APPRECIATION
DATE CURRENCY USD FOR USD (DEPRECIATION)
- ---------- -------------------- -------- ----------- --------------
<S> <C> <C> <C> <C>
11/04/97 JPY 49,340,000 410,393 408,833 $ (1,560)
11/17/97 AUD 950,034 668,818 698,825 30,007
--------------
Net unrealized appreciation on forward foreign
exchange contracts................................ $ 28,447
--------------
--------------
</TABLE>
FORWARD FOREIGN CROSS CURRENCY CONTRACTS
<TABLE>
<CAPTION>
CONTRACTS TO DELIVER CONTRACTS TO RECEIVE
--------------------------------- ---------------------------------
EXPIRATION LOCAL VALUE IN LOCAL VALUE IN NET UNREALIZED
DATE CURRENCY USD CURRENCY USD (DEPRECIATION)
- ---------- -------------------- -------- -------------------- -------- --------------
<S> <C> <C> <C> <C> <C>
11/17/97 GBP 35,694 59,838 ITL 99,086,544 58,460 $ (1,378)
11/17/97 ITL 101,455,198 59,858 GBP 35,694 59,838 (20)
--------------
Net unrealized depreciation on forward foreign exchange contracts...... $ (1,398)
--------------
--------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
GLOSSARY OF CURRENCIES
AUD -- Australian Dollar ITL -- Italian Lira
DEM -- German Deutschemark JPY -- Japanese Yen
DKK -- Danish Krone NZD -- New Zealand Dollar
ESP -- Spanish Peseta SEK -- Swedish Krona
GBP -- British Pound Sterling USD -- United States Dollar
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1997
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- 94.0%
GREAT BRITAIN-12.6%
British Aerospace Plc.................................................................. 15,998 $ 424,057
British Airport Authority Plc.......................................................... 17,692 163,245
British Petroleum Co Plc............................................................... 29,748 431,209
British Telecommunications Plc......................................................... 37,500 284,991
General Electric Plc................................................................... 58,000 370,484
Glaxo Wellcome Plc..................................................................... 14,384 297,780
Granada Group Plc...................................................................... 7,161 98,752
Hays Plc............................................................................... 16,500 193,769
HSBC Holdings Plc...................................................................... 48 1,141
Ladbroke Group......................................................................... 23,389 104,767
Lloyds TSB Group Plc................................................................... 26,292 328,610
London Clubs International............................................................. 28,000 145,620
Mercury Asset Management............................................................... 7,100 156,634
Pearson Plc............................................................................ 23,750 302,019
Railtrack Group Plc.................................................................... 19,274 308,153
Rolls Royce Plc........................................................................ 17,361 62,329
Royal & Sun Alliance Insurance Group................................................... 28,151 269,905
Sage Group Plc......................................................................... 12,500 150,989
Scottish Power Plc..................................................................... 40,297 301,515
Siebe Plc.............................................................................. 19,193 368,680
Smithkline Beecham Plc................................................................. 30,000 284,362
Tesco Plc.............................................................................. 35,820 286,796
Unilever Limited....................................................................... 26,400 181,589
Unilever Plc........................................................................... 12,988 96,745
-----------
5,614,141
-----------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1997
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- CONTINUED
FRANCE-11.7%
Accor SA............................................................................... 1,931 $ 358,920
Alcatel Alsthom........................................................................ 1,675 201,760
Banque National De Paris............................................................... 2,758 121,715
Cap Gemini SA (a)...................................................................... 3,865 306,356
Cie Generale des Eaux.................................................................. 2,141 248,628
Compagnie de Saint Goban............................................................... 662 94,864
Credit Commercial de France............................................................ 6,300 356,315
Dassault Aviation SA................................................................... 800 185,111
Dassault Systemes...................................................................... 6,000 179,642
Elf-Aquitaine SA....................................................................... 3,700 457,205
France Telecom SA *.................................................................... 20,400 770,717
L'Oreal................................................................................ 1 354
LVMH Company........................................................................... 435 73,778
Michelin, Class B (Registered)......................................................... 3,843 196,801
Rhone Polenc........................................................................... 10,076 438,568
Sidel.................................................................................. 1,040 58,316
Societe Generale....................................................................... 2,734 373,798
Technip SA............................................................................. 1,225 129,535
Total SA-Class B....................................................................... 3,752 415,579
Valeo.................................................................................. 3,005 200,068
-----------
5,168,030
-----------
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1997
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- CONTINUED
GERMANY-11.2%
Adidas................................................................................. 2,250 $ 325,463
Bayer AG............................................................................... 6,500 227,991
Bayerische Motoren Werke AG............................................................ 205 148,207
Daimler Benz AG........................................................................ 3,138 210,128
Deutsche Bank AG....................................................................... 7,700 503,557
Deutsche Pfandbrief & Hypob............................................................ 5,000 282,054
Dresdner Bank AG....................................................................... 6,500 265,675
Henkel Kgaa............................................................................ 3,855 187,738
Hoechst AG............................................................................. 8,300 315,668
MAN AG................................................................................. 850 255,761
Mannesmann AG.......................................................................... 885 373,528
SAP AG................................................................................. 954 273,504
Siemens AG............................................................................. 11,110 683,405
Veba AG................................................................................ 7,600 423,434
Volkswagen AG.......................................................................... 800 472,621
-----------
4,948,734
-----------
SWEDEN-9.3%
Biora AB * (a)......................................................................... 40,000 397,296
Electrolux AB.......................................................................... 4,560 376,925
Ericsson AB, Class B................................................................... 6,960 306,211
Hufvudstaden International AB *........................................................ 20,500 13,665
Incentive AB Class A (a)............................................................... 6,000 524,751
Lindex AB.............................................................................. 10,500 295,372
Munters AB * (a)....................................................................... 110,000 1,114,559
Nordbanken AB.......................................................................... 11,950 374,398
Sandvik AB-Class B Fria................................................................ 4,500 136,787
Sparbanken Sverige..................................................................... 12,500 283,307
Spectra-Physics AB, Class A............................................................ 11,100 300,412
-----------
4,123,683
-----------
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1997
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- CONTINUED
SWITZERLAND-8.6%
Adecco SA.............................................................................. 650 $ 206,452
Ares-Serono Group Class B.............................................................. 100 189,144
CS Holdings (Registered)............................................................... 1,880 264,680
Holderbank Finance Glarus Class B...................................................... 260 209,143
Kuoni Reisen Holding (Registered)...................................................... 43 162,664
Nestle SA (Registered)................................................................. 223 314,035
Novartis AG (Bearer)................................................................... 75 118,197
Novartis AG (Registered)............................................................... 330 516,534
Roche Holdings AG...................................................................... 15 222,690
Schweizerische Rueckversicherungs-Gesellschaft (Registered)............................ 178 267,943
Swiss Bank Corp *...................................................................... 965 259,322
Swissair (Registered) *................................................................ 162 217,033
Union Bank of Switzerland.............................................................. 335 385,439
Winterthur Schweizerische Versicherungs-Gesellschaft (Registered)...................... 24 20,540
Zurich Versicherungs (Registered)...................................................... 1,080 445,552
-----------
3,799,368
-----------
NETHERLANDS-7.2%
Akzo Nobel............................................................................. 1,440 253,303
Baan Company NV *...................................................................... 4,375 309,318
Getronics NV........................................................................... 13,180 434,409
Heineken NV............................................................................ 1,900 308,525
ING Groep NV........................................................................... 7,827 328,003
KLM Royal Dutch Airlines NV............................................................ 11,002 372,240
Koninklijke Ahold NV................................................................... 94 2,402
Koninklijke Hoogovens.................................................................. 4,450 203,646
Philips Electronics NV................................................................. 6,330 494,735
PTT Koninklijke Nederland NV........................................................... 4,769 181,952
Vedior NV (a).......................................................................... 14,000 287,227
Wolters Kluwer NV...................................................................... 9 1,103
-----------
3,176,863
-----------
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1997
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- CONTINUED
JAPAN-6.6%
Canon Inc.............................................................................. 13,000 $ 315,558
Canon Sales Co. Inc.................................................................... 400 7,282
Circle K Japan Co Ltd.................................................................. 60 3,082
Fuji Photo Film........................................................................ 10,000 362,442
Fujitsu Ltd............................................................................ 500 5,487
Nintendo Corp Ltd...................................................................... 5,500 475,498
Nippon Telegraph & Telephone Corporation............................................... 16 135,660
Nippon Telegraph & Telephone Corporation ADR........................................... 5,375 228,102
Promise Co Ltd......................................................................... 4,830 282,665
Rohm Corp.............................................................................. 3,000 286,795
Sankyo Co Ltd.......................................................................... 11,000 363,024
Sony Corp.............................................................................. 5,400 448,448
-----------
2,914,043
-----------
FINLAND-5.9%
Cultor Oyj............................................................................. 6,640 358,867
Hartwall Oy AB......................................................................... 4,517 370,550
Konecranes International............................................................... 3,435 129,291
Merita Ltd Class A..................................................................... 70,980 346,628
Nokia (ORD)............................................................................ 4,581 399,674
Pohjola Insurance Group Class B........................................................ 7,400 284,959
Raision Tehtaat Oy..................................................................... 2,760 303,663
Rauma Oy............................................................................... 167 3,127
Tt Tieto Oy Class B.................................................................... 1,915 214,390
Upm-Kymmeme............................................................................ 9,269 204,318
-----------
2,615,467
-----------
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1997
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- CONTINUED
CANADA-4.2%
Barrick Gold Corp...................................................................... 3,000 $ 61,500
BCE, Inc............................................................................... 11,080 308,855
Bombardier Inc-Class B................................................................. 13,760 263,272
Magna International, Inc............................................................... 4,600 303,313
Northern Telecom Communications........................................................ 1,960 175,608
Potash Corporation of Saskatchewan, Inc................................................ 4,500 368,438
Royal Bank of Canada................................................................... 6,740 361,033
-----------
1,842,019
-----------
SPAIN-3.4%
Banco Central Hispano.................................................................. 10,680 199,380
Banco Popular Espanola SA.............................................................. 3,896 229,696
Empresa Nacional de Electricidad....................................................... 22,780 428,395
Tabacalera Spani....................................................................... 4,059 291,958
Telefonica de Espana................................................................... 13,560 369,480
-----------
1,518,909
-----------
ITALY-3.1%
Banca Populare di Brescia (a).......................................................... 50,000 375,856
ENI SPA................................................................................ 42,000 237,248
Telecom Italia Mobile.................................................................. 70,000 258,264
Telecom Italia SPA..................................................................... 80,000 500,118
-----------
1,371,486
-----------
PORTUGAL-1.8%
Banco Espirito Santo (Registered)...................................................... 11,400 330,060
Jeronimo Martins....................................................................... 3,299 215,376
Portugal Telecom....................................................................... 6,250 255,996
-----------
801,432
-----------
NORWAY-1.2%
Den Norske Bank ASA.................................................................... 34,650 156,698
Kvaerner ASA........................................................................... 3,100 159,933
Norsk Hydro............................................................................ 3,822 210,583
-----------
527,214
-----------
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1997
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- CONTINUED
IRELAND-1.2%
Bank of Ireland........................................................................ 15,253 $ 192,584
Elan Corp Plc ADR *.................................................................... 4,150 206,981
Ryanair Holdings Plc ADR *............................................................. 5,000 125,000
-----------
524,565
-----------
RUSSIA-1.1%
Lukoil Oil Co ADR...................................................................... 5,530 470,396
-----------
AUSTRIA-0.8%
Oemv AG................................................................................ 2,320 329,640
Scala Business Solutions *............................................................. 3,330 25,783
-----------
355,423
-----------
AUSTRALIA-0.8%
Australia & New Zealand Bank Group..................................................... 25,759 179,829
Sydney Harbor Casino Ltd *............................................................. 60,000 61,226
The News Corporation Ltd............................................................... 19,204 92,036
-----------
333,091
-----------
BELGIUM-0.5%
Credit Communal Hldg Dexia............................................................. 2,000 218,137
-----------
GREECE-0.5%
National Bank of Greece *.............................................................. 2,013 210,310
-----------
TURKEY-0.3%
Kazkommertsbank Co GDR * (a)........................................................... 6,659 146,498
-----------
SOUTH AFRICA-0.3%
Barlow Limited......................................................................... 3,224 32,471
Nedcor Ltd............................................................................. 2,887 60,573
South African Breweries Ltd............................................................ 1,342 35,698
-----------
128,742
-----------
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1997
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- CONTINUED
POLAND-0.3%
Bank Rozwoju Eksportu SA............................................................... 1,300 $ 23,501
Electrim SA............................................................................ 5,000 47,059
Gorazdze............................................................................... 800 22,611
Mostostal-Export SA.................................................................... 10,558 28,478
-----------
121,649
-----------
MEXICO-0.2%
Grupo Posadas SA-Class L *............................................................. 180,000 96,832
-----------
MALAYSIA-0.2%
Arab-Malaysian Merchant Bank........................................................... 8,000 13,030
Hicom Holdings Berhad.................................................................. 27,000 22,835
IOI Properties Berhad.................................................................. 22,000 17,357
Lion Land Berhad....................................................................... 50,000 16,436
Malayan Banking Berhad................................................................. 6,000 23,130
-----------
92,788
-----------
MAURITIUS-0.2%
New Mauritius Hotels Ltd............................................................... 23,500 45,652
State Bank of Mauritius Ltd............................................................ 72,000 41,961
-----------
87,613
-----------
INDONESIA-0.2%
Pt Bank International Indonesia........................................................ 88,500 19,026
Pt Citra Marga Nusaphala Persada....................................................... 146,000 41,512
Pt Darya Varia Laboratoria-Foreign..................................................... 29,120 7,270
Pt Hm Sampoerna-Foreign................................................................ 7,000 12,184
-----------
79,992
-----------
CHILE-0.2%
Vina Concha Y Toro ADR................................................................. 2,500 68,438
-----------
CZECH REPUBLIC-0.1%
SPT Telecom AS *....................................................................... 570 65,575
-----------
NEW ZEALAND-0.1%
Lion Nathan............................................................................ 27,000 65,229
-----------
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1997
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
COMMON STOCKS -- CONTINUED
THAILAND-0.1%
Advanced Info Service Public Co Ltd-Foreign (Registered)............................... 5,600 $ 31,583
Land & House Plc (Foreign Shares)...................................................... 7,850 6,826
Siam Cement Co Ltd-Foreign (Registered)................................................ 1,300 11,046
Siam Commercial Bank (Foreign Shares).................................................. 6,300 12,287
-----------
61,742
-----------
HUNGARY-0.1%
Mol Magyar Olaj-Es Gazipari............................................................ 1,950 42,007
-----------
SOUTH KOREA-0.0%
Korea Electric Power Corp ADR.......................................................... 2,500 20,625
-----------
PHILIPPINES-0.0%
San Miguel Corporation, Class B (ORD).................................................. 18,150 20,281
-----------
HONG KONG-0.0%
HSBC Holdings Plc...................................................................... 78 1,766
-----------
PERU-0.0%
Cementos Lima SA-Trabajo............................................................... 1 2
-----------
TOTAL COMMON STOCKS (COST $36,872,392)................................................. 41,633,090
-----------
INVESTMENT FUNDS -- 0.2%
POLAND-0.1%
Polish National Investment Fund *...................................................... 1,500 55,954
-----------
MULTI-NATIONAL-0.1%
Morgan Stanley Africa Investment Fund, Inc............................................. 3,100 47,275
-----------
TOTAL INVESTMENT FUNDS (COST $114,977)................................................. 103,229
-----------
RIGHTS & WARRANTS -- 0.2%
HUNGARY-0.2%
Egis Rights *.......................................................................... 780 36,610
Pick Szeged Rights *................................................................... 526 43,218
-----------
79,828
-----------
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1997
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- ------- -----------
<S> <C> <C>
RIGHTS & WARRANTS -- CONTINUED
GREECE-0.0%
National Bank of Greece Rights *....................................................... 2,013 $ 8,117
-----------
AUSTRIA-0.0%
Scala Business Solution Warrants, expire 3/31/1999 *................................... 1,387 2,628
Scala Business Solution Warrants, expire 3/31/2001 *................................... 1,387 2,285
-----------
4,913
-----------
BRAZIL-0.0%
Brahma Warrants, expire 4/30/2003 *.................................................... 9,993 2,266
-----------
FRANCE-0.0%
Compagnie Generale des Eaux Warrants, expire 5/02/2001 *............................... 1,360 718
-----------
SWITZERLAND-0.0%
Roche Holdings Warrants, expire 5/5/1998 *............................................. 5 321
-----------
TOTAL RIGHTS & WARRANTS (COST $49,379)................................................. 96,163
-----------
CORPORATE CONVERTIBLE BOND -- 0.0%
</TABLE>
<TABLE>
<CAPTION>
PAR
VALUE
------
<S> <C> <C>
MALAYSIA-0.0%
AMMB Holdings Berhad 7.500% due 5/08/2002 (Cost $3,192) MYR 8,000 24
----------
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1997
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
FACE VALUE
CURRENCY VALUE (NOTE 1)
- -------- --------- -----------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS -- 9.3%
USD 4,102,869 Investors Bank & Trust Company Repurchase Agreement, dated 10/31/1997, due 11/03/97,
with a maturity value of $4,104,664 and an effective yield of 5.250%, collateralized
by U.S. Government and Agency Obligations with rates ranging from 6.541% to 8.076%,
with maturity dates ranging from 7/01/2018 to 7/01/2025 and an aggregate market
value of $4,308,175 (at amortized cost)............................................. $ 4,102,869
-----------
TOTAL INVESTMENTS-103.7% (COST $41,142,809)**....................................... 45,935,375
OTHER ASSETS AND LIABILITIES (NET)-(3.7%)........................................... (1,633,638)
-----------
TOTAL NET ASSETS-100.0%............................................................. $44,301,737
-----------
-----------
PORTFOLIO FOOTNOTES:
ADR American Depositary Receipt
ORD Ordinary Shares
GDR Global Depository Receipt
* Non-income producing security.
** Aggregate cost for federal income tax purposes was $41,148,495. (See Note 4)
(a) Securities that may be resold to 'qualified institutional buyers' under Rule
144A or securities offered pursuant to Section 4 (2) of the Securities Act of 1933,
as amended. These securities have been determined to be liquid under guidelines
established by the Board of Trustees.
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
SCHEDULE OF FORWARD FOREIGN EXCHANGE CONTRACTS
OCTOBER 31, 1997
FORWARD FOREIGN EXCHANGE CONTRACTS TO BUY
<TABLE>
<CAPTION>
CONTRACTS TO RECEIVE
-------------------------------------------- NET UNREALIZED
EXPIRATION LOCAL VALUE IN IN EXCHANGE APPRECIATION
DATE CURRENCY USD FOR USD (DEPRECIATION)
- ---------- --------------------- ---------- ----------- --------------
<S> <C> <C> <C> <C>
11/14/97 FIM 7,043,355 1,360,732 1,358,488 $ 2,244
11/14/97 SEK 10,684,305 1,425,128 1,428,383 (3,255)
11/28/97 FRF 11,446,600 1,984,258 1,983,125 1,133
--------------
Net unrealized appreciation on forward foreign exchange
contracts................................................................. $ 122
--------------
--------------
</TABLE>
FORWARD FOREIGN EXCHANGE CONTRACTS TO SELL
<TABLE>
<CAPTION>
CONTRACTS TO DELIVER
-------------------------------------------
EXPIRATION LOCAL VALUE IN IN EXCHANGE NET UNREALIZED
DATE CURRENCY USD FOR USD DEPRECIATION
- ---------- --------------------- --------- ----------- --------------
<S> <C> <C> <C> <C>
11/14/97 FIM 7,043,355 1,360,732 1,343,383 $(17,349)
11/14/97 JPY 63,027,500 524,991 522,832 (2,159)
11/14/97 SEK 10,684,305 1,425,128 1,413,268 (11,860)
11/24/97 JPY 115,170,000 960,690 954,184 (6,506)
11/28/97 FRF 11,446,600 1,984,258 1,980,483 (3,775)
--------------
Net unrealized depreciation on forward foreign exchange contracts... $(41,649)
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
GLOSSARY OF CURRENCIES
<S> <C> <C> <C> <C> <C>
FIM -- Finnish Markka MYR -- Malaysian Ringgit
FRF -- French Franc SEK -- Swedish Krona
JPY -- Japanese Yen USD -- United States Dollar
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS-INDUSTRY SECTOR (UNAUDITED)
OCTOBER 31, 1997
(PERCENTAGE OF NET ASSETS)
At October 31, 1997, sector diversification of the fund's equity investments
was as follows:
<TABLE>
<CAPTION>
MARKET
% OF NET VALUE
ASSETS (NOTE 1)
-------- -----------
<S> <C> <C>
INDUSTRY SECTOR:
Banking....................................................................................... 14.1% $ 6,186,163
Communications................................................................................ 6.8 3,032,448
Beverages, Food and Tobacco................................................................... 6.1 2,713,859
Oil and Gas................................................................................... 4.7 2,069,699
Chemicals..................................................................................... 4.4 1,941,284
Computer Software and Processing.............................................................. 4.3 1,899,304
Financial Services............................................................................ 4.3 1,893,640
Electronics................................................................................... 4.0 1,781,265
Pharmaceuticals............................................................................... 3.5 1,554,396
Telephone Systems............................................................................. 3.5 1,539,806
Transportation................................................................................ 3.4 1,494,400
Insurance..................................................................................... 2.9 1,288,899
Automotive.................................................................................... 2.6 1,186,538
Electric Utilities............................................................................ 2.6 1,173,969
Environmental Controls........................................................................ 2.5 1,114,559
Heavy Machinery............................................................................... 2.5 1,113,596
Industrial--Diversified....................................................................... 1.9 836,209
Retailers..................................................................................... 1.9 819,941
Entertainment and Leisure..................................................................... 1.8 809,722
Health........................................................................................ 1.8 797,400
Lodging....................................................................................... 1.5 664,068
Commercial Services........................................................................... 1.3 574,084
Airlines...................................................................................... 1.1 497,240
Building Materials............................................................................ 0.9 406,001
Medical Supplies.............................................................................. 0.9 397,296
Media--Broadcasting and Publishing............................................................ 0.9 394,055
Consumer Goods................................................................................ 0.9 376,925
Industrial.................................................................................... 0.8 375,962
Other......................................................................................... 6.5 2,899,778
-------- -----------
TOTAL INVESTMENTS (EXCLUDES REPURCHASE AGREEMENT)............................................... 94.4 41,832,506
OTHER ASSETS AND LIABILITIES (NET).............................................................. 5.6 2,469,231
-------- -----------
NET ASSETS...................................................................................... 100.0% $44,301,737
-------- -----------
-------- -----------
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
BJB INVESTMENT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
<TABLE>
<CAPTION>
BJB BJB
GLOBAL INCOME INTERNATIONAL EQUITY
FUND FUND
------------- --------------------
<S> <C> <C>
ASSETS:
Investments in securities, at value (Cost $11,442,446 and $ 37,039,940,
respectively).................................................................... $11,632,717 $ 41,832,506
Repurchase agreements, at cost...................................................... 27,110 4,102,869
Cash and foreign currency, at value (Cost $463,561 and $1,000,010, respectively).... 480,072 961,812
Receivables:
Investments sold................................................................. 262,710 2,431,574
Fund shares sold................................................................. 3,185 78,027
Interest and dividends........................................................... 233,403 43,510
Tax reclaim...................................................................... -- 38,603
Unrealized appreciation on forward foreign exchange contracts.................... 30,007 3,377
Other Assets:
Unamortized organization costs (Note 6).......................................... -- 4,186
Prepaid expense.................................................................. 4,123 13,058
------------- --------------------
Total Assets..................................................................... 12,673,327 49,509,522
------------- --------------------
LIABILITIES:
Payables:
Investments purchased............................................................ 706,348 4,978,952
Investment advisory fee payable (Note 2)......................................... 20,688 59,276
Custody and administration fee payable........................................... 17,540 45,925
Unrealized depreciation on forward foreign exchange contracts.................... 3,732 44,904
Distribution and shareholder servicing fees payable (Note 3)..................... 7,937 29,614
Accrued expenses and other payables................................................. 27,727 49,114
------------- --------------------
Total Liabilities................................................................ 783,972 5,207,785
------------- --------------------
NET ASSETS............................................................................ $11,889,355 $ 44,301,737
------------- --------------------
------------- --------------------
NET ASSETS CONSIST OF:
Par value........................................................................... $ 1,016 $ 3,303
Paid in capital in excess of par value.............................................. 12,679,732 43,322,283
Undistributed net investment income (Distributions in excess of income)............. (26,275) 533,978
Accumulated net realized loss on investments sold, forward foreign exchange
contracts and foreign currency transactions...................................... (1,005,867) (4,247,589)
Net unrealized appreciation on investments, forward foreign exchange contracts and
foreign currency related transactions............................................ 240,749 4,689,762
------------- --------------------
NET ASSETS............................................................................ $11,889,355 $ 44,301,737
------------- --------------------
------------- --------------------
SHARES OUTSTANDING.................................................................... 1,015,819 3,302,528
------------- --------------------
------------- --------------------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE........................................ $ 11.70 $ 13.41
------------- --------------------
------------- --------------------
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
BJB INVESTMENT FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1997
<TABLE>
<CAPTION>
BJB BJB
GLOBAL INCOME INTERNATIONAL EQUITY
FUND FUND
------------- --------------------
<S> <C> <C>
INVESTMENT INCOME (LOSS):
Interest............................................................................ $ 889,032 $ 55,454
Dividends+.......................................................................... -- 565,811
------------- -----------
889,032 621,265
EXPENSES:
Investment advisory fee (Note 2).................................................... 91,644 346,856
Custody and administration fees..................................................... 57,505 206,947
Distribution and shareholder servicing fees (Note 3)................................ 35,247 86,714
Transfer agent fees................................................................. 21,156 22,376
Professional fees................................................................... 16,009 61,672
Amortization of organization costs (Note 6)......................................... 14,979 5,552
Trustees' fees and expenses (Note 2)................................................ 11,999 11,999
Insurance premium expense........................................................... 11,093 14,769
Shareholder reports................................................................. 10,589 28,598
Registration and filing fees........................................................ 9,000 8,999
Miscellaneous fees.................................................................. 1,058 1,059
------------- -----------
Total gross expenses............................................................. 280,279 795,541
Less: Fees waived by investment adviser (Note 2)................................. -- (173,428)
------------- -----------
Net Expenses..................................................................... 280,279 622,113
------------- -----------
NET INVESTMENT INCOME (LOSS).......................................................... 608,753 (848)
------------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 4):
Realized gain (loss) on:
Security transactions............................................................ (52,204) 373,112
Forward foreign exchange contracts............................................... (31,967) 706,203
Foreign currency transactions.................................................... 8,733 (161,594)
------------- -----------
Net realized gain (loss) on investments........................................ (75,438) 917,721
------------- -----------
Net change in unrealized appreciation (depreciation) on:
Securities..................................................................... (206,728) 3,529,481
Forward foreign exchange contracts............................................. 37,578 (76,722)
Currencies and net other assets................................................ 20,316 (60,379)
------------- -----------
Net change in unrealized appreciation (depreciation) on investments......... (148,834) 3,392,380
------------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS................................ (224,272) 4,310,101
------------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................. $ 384,481 $4,309,253
------------- -----------
------------- -----------
</TABLE>
- ------------------
+ Net of foreign withholding taxes of $74,742 for the Equity Fund.
See Notes to Financial Statements.
24
<PAGE>
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income................................................................. $ 608,753 $ 732,684
Net realized gain (loss) on investments............................................... (75,438) 570,123
Net change in unrealized appreciation (depreciation) on investments................... (148,834) (118,640)
---------------- ----------------
Net increase in net assets resulting from operations.................................. 384,481 1,184,167
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1):
Dividends from net investment income.................................................. (700,402) (1,396,952)
Distributions from Capital............................................................ (114,208) --
FUND SHARE TRANSACTIONS:
Net decrease from Fund share transactions (Note 5).................................... (2,264,748) (2,529,620)
---------------- ----------------
Net decrease in net assets............................................................ (2,694,877) (2,742,405)
NET ASSETS:
Beginning of period................................................................... 14,584,232 17,326,637
---------------- ----------------
End of period (including undistributed (distributions in excess of) net investment
income of $(26,275) and $140,813, respectively)..................................... $ 11,889,355 $ 14,584,232
---------------- ----------------
---------------- ----------------
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ----------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment loss................................................................... $ (848) $ (67,871)
Net realized gain on investments...................................................... 917,721 288,180
Net change in unrealized appreciation (depreciation) on investments................... 3,392,380 1,079,084
---------------- ----------------
Net increase in net assets resulting from operations.................................. 4,309,253 1,299,393
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1):
Dividends from net investment income.................................................. (67,184) --
FUND SHARE TRANSACTIONS:
Net increase from Fund share transactions (Note 5).................................... 20,898,481 8,218,480
---------------- ----------------
Net increase in net assets............................................................ 25,140,550 9,517,873
NET ASSETS:
Beginning of period................................................................... 19,161,187 9,643,314
---------------- ----------------
End of period (including undistributed (distributions in excess of) net investment
income of $533,978 and $(891), respectively)........................................ $ 44,301,737 $ 19,161,187
---------------- ----------------
---------------- ----------------
</TABLE>
See Notes to Financial Statements.
26
<PAGE>
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------------------
10/31/97 10/31/96 10/31/95# 10/31/94# 10/31/93
-------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period................................ $ 12.01 $ 12.11 $ 11.16 $ 12.28 $ 12.36
-------- -------- --------- --------- --------
Income (Loss) from investment operations:
Net investment income............................................. 0.50 0.59 0.59 0.39 0.37
Net realized and unrealized gain (loss) on investments............ (0.13) 0.36 0.92 (0.81) 0.58
-------- -------- --------- --------- --------
Total income (loss) from investment operations................. 0.37 0.95 1.51 (0.42) 0.95
-------- -------- --------- --------- --------
Less Distributions:
Dividends from net investment income................................ (0.58) (1.05) (0.56) (0.27) (0.37)
Distributions from net realized gains............................... -- -- -- -- (0.66)
Distributions from Capital (Note 1)................................. (0.10) -- -- (0.43) --
-------- -------- --------- --------- --------
Total distributions............................................ (0.68) (1.05) (0.56) (0.70) (1.03)
-------- -------- --------- --------- --------
Net Asset Value, end of period...................................... $ 11.70 $ 12.01 $ 12.11 $ 11.16 $ 12.28
-------- -------- --------- --------- --------
-------- -------- --------- --------- --------
Total Return **..................................................... 3.24% 8.25% 13.90% (3.54)% 8.15%
-------- -------- --------- --------- --------
-------- -------- --------- --------- --------
Ratios/Supplemental Data:
Net assets, end of period (in 000's)................................ $ 11,889 $ 14,584 $17,327 $28,619 $ 57,682
Ratio of net investment income to average net assets................ 4.32% 4.71% 5.19% 3.29% 2.24%
Ratio of total expenses to average net assets....................... 1.99% 2.53%## 2.15%## 1.66% 1.78%
Portfolio turnover rate............................................. 162% 219% 319% 320% 291%
</TABLE>
- ------------------------------
<TABLE>
<CAPTION>
<C> <S>
** Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales
charge.
# Per share amounts have been calculated using the monthly average share method, which more appropriately presents the
per share data for the period since the use of the undistributed income method does not accord with results of
operations.
## Includes indirectly paid expenses. Excluding indirectly paid expenses the ratio of total expenses to average net
assets would have been 2.43% and 2.05% for the years ended October 31, 1996 and 1995, respectively.
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEAR ENDED PERIOD
------------------------------------------------------- ENDED
10/31/97# 10/31/96 10/31/95# 10/31/94 10/31/93*
--------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period........... $ 11.43 $ 10.13 $ 11.30 $ 13.10 $ 12.00
--------- -------- --------- -------- ---------
Income from investment operations:
Net investment gain (loss)++................. 0.00 (0.02) (0.06) (0.21) (0.02)
Net realized and unrealized gain (loss) on
investments............................... 2.02 1.32 (1.11) (1.56) 1.12
--------- -------- --------- -------- ---------
Total income (loss) from investment
operations.............................. 2.02 1.30 (1.17) (1.77) 1.10
--------- -------- --------- -------- ---------
Less distributions:
In excess of net investment income............. (0.04) -- -- (0.03) --
--------- -------- --------- -------- ---------
--------- -------- --------- -------- ---------
Net Asset Value, end of period................. $ 13.41 $ 11.43 $ 10.13 $ 11.30 $ 13.10
--------- -------- --------- -------- ---------
--------- -------- --------- -------- ---------
Total Return **................................ 17.68% 12.73% (10.35)% (13.53)% 9.17%
--------- -------- --------- -------- ---------
--------- -------- --------- -------- ---------
Ratios/Supplemental Data:
Net assets, end of period (in 000's)........... $ 44,302 $ 19,161 $ 9,643 $ 14,831 $11,292
Ratio of net investment gain (loss) to average
net assets................................... 0.00% (0.58)% (0.63)% (1.26)% (3.83)%+
Ratio of total expenses to average net
assets....................................... 1.79%(a) 2.46%(a)(c) 2.84%(b)(c) 2.16% 2.09%+
Portfolio turnover rate........................ 94% 67% 116% 169% 20%
Average brokerage commission rate(d)........... $ 0.00835 $0.00464 N/A N/A N/A
</TABLE>
- ------------------------------
<TABLE>
<CAPTION>
<S> <C>
* The BJB International Equity Fund commenced operations on October 4, 1993.
** Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales
charge.
# Per share amounts have been calculated using the monthly average share method, which more appropriately presents the
per share data for the period since the use of the undistributed income method does not accord with results of
operations.
+ Annualized.
++ Net investment loss before waiver of fees by the investment adviser was ($0.07), ($0.05) and ($0.11) for the years
ended October 31, 1997, 1996 and 1995, respectively.
(a) Figure is net of the voluntary expense waiver by the Adviser. Excluding this waiver, the ratio of total expenses to
average net assets would have been 2.29% and 2.96% for the years ended October 31, 1997 and 1996, respectively.
(b) Figures are net of the expense reimbursement by the Adviser in connection with the voluntary and involuntary expense
limitation. Before the expense reimbursement the ratio of total expenses to average net assets would have been
3.36%.
(c) Includes indirectly paid expenses. Excluding indirectly paid expenses the ratio of total expenses to average net
assets would have been 2.37% and 2.67% for the years ended October 31, 1996 and 1995, respectively.
(d) The average broker commission rate will vary depending on the markets in which trades are executed.
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
BJB INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
BJB Investment Funds (the 'Trust') is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended (the
'1940 Act'), as an open-end management investment company that currently offers
two investment funds: BJB Global Income Fund (the 'Income Fund') and BJB
International Equity Fund (the 'Equity Fund') (individually, a 'Fund' and
collectively, the 'Funds'). The Trust was organized as a Massachusetts business
trust under the laws of the Commonwealth of Massachusetts on April 30, 1992. The
Income Fund commenced operations on July 1, 1992 and the Equity Fund commenced
operations on October 4, 1993.
The Income Fund's investment objective is to maximize current income
consistent with the protection of principal by investing in a non-diversified
portfolio of fixed income securities of governmental, supranational and
corporate issuers denominated in various currencies, including U.S. dollars. The
Equity Fund's investment objective is long-term growth of capital from investing
in a diversified portfolio of common stocks of foreign issuers of all sizes.
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
presentation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from these estimates.
Portfolio valuation: Generally, each Fund's investments are valued at
market value or, in the absence of a market value, at fair value as determined
by or under the direction of the Trust's Board of Trustees. A security which is
traded primarily on a United States or foreign stock exchange is valued at the
last sale price on that exchange or, if there were no sales during the day, at
the mean of the current quoted bid and asked prices. Portfolio securities which
are traded primarily on foreign securities exchanges are generally valued at the
preceding closing values of such securities on their respective exchanges,
except that when an occurrence subsequent to the time that a value was so
established is likely to have changed such value, then the fair value of those
securities will be determined by consideration of other factors by or under the
direction of the Trust's Board of Trustees or its delegates. Debt securities
(other than government securities and short-term obligations) are valued by
independent pricing services approved by the Trust's Board of Trustees.
Investments in government securities (other than short-term securities) are
valued at the mean of the quoted bid and asked prices in the over-the-counter
market. Short-term investments that mature in 60 days or less are valued at
amortized cost.
Repurchase agreements: The Funds may engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, a Fund takes
possession of an underlying debt obligation, in return for the use of the Funds
available cash, subject to an obligation of the seller to repurchase, and the
Fund to resell, the obligation at an agreed-upon price and time, thereby
determining the yield during the Fund's holding period. This arrangement results
in a fixed rate of return that is not subject to market fluctuations during a
Fund's holding period. The value of the collateral at all times is equal to at
least 100% of the total amount of the repurchase obligations, including accrued
interest. In the event of counterparty default, the Fund has the right to use
the collateral to offset losses incurred. There is potential loss to a Fund in
the event the Fund is delayed or prevented from exercising its rights to dispose
of the collateral securities, including the risk of a possible decline in the
value of the underlying securities during the period while the Fund seeks to
assert its rights. The Funds' investment advisers, acting under the supervision
of the Board of Trustees, reviews the value of the collateral and the
creditworthiness of those banks and dealers with which the Funds enter into
repurchase agreements to evaluate potential risks.
Foreign currency: The books and records of the Funds are maintained in
United States (U.S.) dollars. Foreign currencies, investments and other assets
and liabilities are translated into U.S. dollars at the exchange rates
prevailing at the end of the period,
29
<PAGE>
BJB INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
purchases and sales of investment securities and income and expenses are
translated on the respective dates of such transactions. Unrealized gains or
losses on investments which result from changes in foreign currencies have been
included in the net unrealized appreciation (depreciation) of investments. Net
realized currency gains and losses include foreign currency gains and losses
between trade date and settlement date on investment securities transactions,
foreign currency transactions and the difference between the amounts of interest
and dividends recorded on the books of the Funds and the amount actually
received. The portion of foreign currency gains and losses related to
fluctuations in exchange rates between the purchase trade date and sale trade
date is included in realized gains and losses on security transactions.
Forward foreign currency contracts: Forward foreign currency contracts are
valued at the forward rate and are marked-to-market daily. The change in market
value is recorded by a Fund as an unrealized gain or loss. When the contract is
closed, a Fund records a realized gain or loss equal to the difference between
the value of the contract at the time it was opened and the value at the time it
was closed.
The use of forward foreign currency contracts does not eliminate
fluctuations in the underlying prices of a Fund's portfolio securities, but it
does establish a rate of exchange that can be achieved in the future. Although
forward foreign currency contracts limit the risk of loss due to a decline in
the value of the currency holdings, they also limit any potential gain that
might result should the value of the currency increase. In addition, a Fund
could be exposed to risks if the counterparties to the contracts are unable to
meet the terms of their contracts.
Option contracts: Purchase of put and call options are recorded as an
investment, the value of which is marked-to-market daily. When a purchased
option expires, a Fund will realize a loss equal to the premium paid. When a
Fund enters into a closing sale transaction, the Fund will realize a gain or
loss depending on whether the sales proceeds from the closing sale transaction
are greater or less than the premium paid. When a Fund exercises a put option,
it will realize a gain or loss from the sale of the underlying security and the
proceeds from such sale will be decreased by the premium originally paid. When a
Fund exercises a call option, the cost of the security which the Fund purchases
upon exercise will be increased by the premium originally paid.
When a Fund writes a call option or a put option, an amount equal to the
premium received by a Fund is recorded as a liability, the value of which is
marked-to-market daily. When a written option expires, a Fund realizes a gain
equal to the amount of the premium received. When a Fund enters into a closing
purchase transaction the Fund realizes a gain (or loss if the cost of the
closing purchase transaction exceeds the premium received when the option was
sold) without regard to any unrealized gain or loss on the underlying security,
and the liability related to such option is eliminated. When a call option is
exercised, a Fund realizes a gain or loss from the sale of the underlying
security and the proceeds from such sale are increased by the premium originally
received. When a put option is exercised, the amount of the premium originally
received will reduce the cost of the security which a Fund purchased upon
exercise.
Unlike options on specific securities, all settlements of options on stock
indices are in cash and gains or losses depend on general movements in the
stocks included in the index rather than price movements on a particular stock.
There is no physical delivery of securities.
The risk associated with purchasing options is limited to the premium
originally paid. The risk in writing a call option is that a Fund may forego the
opportunity of profit if the market price of the underlying security increases
and the option is exercised. The risk in writing a put option is that a Fund may
incur a loss if the market price of the underlying security decreases and the
option is exercised. There is also the risk that a Fund may not be able to enter
into a closing transaction because of an illiquid secondary market. In addition,
the Fund could be exposed to risks if the counterparties to the transactions are
unable to meet the terms of the contracts.
30
<PAGE>
BJB INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Securities transactions and investment income: Securities transactions are
recorded as of the trade date. Realized gains and losses from securities
transactions are recorded on the identified cost basis. Interest income is
recorded on the accrual basis. Dividend income is recorded on the ex-dividend
date.
Dividends and distributions to shareholders: Distributions to shareholders
are recorded on the ex-dividend date. Each Fund intends to distribute annually
to its shareholders substantially all of its taxable income. The Income Fund
declares and pays monthly dividends. The Equity Fund declares and pays dividends
from its net investment income, if any, annually. Both Funds will distribute net
realized capital gains, if any, annually. Additional distributions of net
investment income and capital gains may be made at the discretion of the Board
of Trustees to avoid the application of the excise tax imposed under Section
4982 of the Internal Revenue Code of 1986, as amended, for certain undistributed
amounts. Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to differing
treatments of income and gains on various investment securities held by a Fund,
timing differences and differing characterization of distributions made by a
Fund as a whole. Permanent differences incurred during the year ended October
31, 1997 resulting from differences in book and tax accounting have been
reclassified at year-end to undistributed net investment income, accumulated net
realized loss, and paid-in capital as follows:
<TABLE>
<CAPTION>
INCREASE INCREASE/
IN UNDISTRIBUTED (DECREASE)
NET INVESTMENT IN ACCUMULATED (DECREASE) IN
INCOME REALIZED LOSS PAID-IN CAPITAL
---------------- -------------- ---------------
<S> <C> <C> <C>
Income Fund.............................................................. $ 38,769 $ 138,145 $(176,914)
Equity Fund.............................................................. 602,901 (602,901) --
</TABLE>
Federal income taxes: The Trust intends that each Fund separately qualify
as a regulated investment company for U.S. federal income tax purposes.
Accordingly, the Funds do not anticipate that any income taxes will be paid. It
is expected that certain capital gains earned by the Funds and certain dividends
and interest received by the Funds will be subject to foreign withholding taxes.
2. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS
Julius Baer Investment Management Inc. ('Julius Baer Investment
Management') serves as the Income Fund's investment adviser pursuant to an
investment advisory agreement. The Income Fund pays Julius Baer Investment
Management a quarterly fee for its investment advisory services calculated at an
annual rate of 0.65% of the Income Fund's average daily net assets. Bank Julius
Baer & Co., Ltd.-New York Branch ('Bank Julius Baer') serves as the Income
Fund's servicing agent pursuant to a servicing agent agreement with Julius Baer
Investment Management. Out of its advisory fee, Julius Baer Investment
Management pays Bank Julius Baer a quarterly fee calculated at an annual rate of
0.15% of the Income Fund's average daily net assets.
Bank Julius Baer serves as the Equity Fund's investment adviser pursuant to
an investment advisory agreement. The Equity Fund pays Bank Julius Baer a
quarterly fee for its investment advisory services calculated at an annual rate
of 1.00% of the Equity Fund's average daily net assets. During the year ended
October 31, 1997, the adviser agreed to waive half (0.50%) of its 1.00% fee.
No director, officer or employee of Julius Baer Investment Management, Bank
Julius Baer or any affiliates of those entities received any compensation from
the Trust for serving as an officer or Trustee of the Funds. The Funds pay each
of the Trustees who is not a director, officer or employee of Julius Baer
Investment Management, Bank Julius Baer or any affiliate thereof an annual fee
of $5,000 plus $250 for each Board of Trustees meeting attended. In addition,
the Funds reimburse these Trustees for travel and out-of-pocket expenses
incurred in connection with the Board of Trustees meetings.
31
<PAGE>
BJB INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
For the year ended October 31, 1997, the Funds incurred total brokerage
commissions of $200,701 of which $3,534 was paid in total to Bank Julius Baer,
Frankfurt and Bank Julius Baer, Zurich (affiliates of the advisers).
3. DISTRIBUTION AND SHAREHOLDER SERVICING PLAN
The Trust has adopted a Shareholder Services Plan and a Distribution Plan
(the 'Plans') pursuant to Rule 12b-1 of the 1940 Act. Under the Plans, the Funds
may compensate certain financial institutions, including Funds Distributor Inc.,
the distributor, for certain distribution, shareholder servicing, administrative
and accounting services for their clients and customers who are beneficial
owners of each of the Funds' shares. A Fund may expend an aggregate amount on an
annual basis not to exceed 0.25% of the value of the average daily net assets of
the Fund. For the year ended October 31, 1997, the Income Fund and Equity Fund
incurred $35,247 and $86,714 respectively, in distribution and shareholder
servicing fees.
Under their terms, the Plans shall remain in effect from year to year,
provided such continuance is approved annually by a vote of a majority of the
Trustees and a majority of those Trustees who are not 'interested persons' of
the Trust and who have no direct or indirect financial interest in the operation
of the Plans or in any agreement related to the Plans.
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of securities, excluding U.S.
government securities and short-term investments, during the year ended October
31, 1997, were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
----------- -----------
<S> <C> <C>
Income Fund................................................................................. $14,229,366 $15,468,280
Equity Fund................................................................................. 52,632,199 31,270,891
</TABLE>
Cost of purchases and proceeds from sales of long-term U.S. government
securities during the year ended October 31, 1997, were $6,671,525 and
$6,782,983, respectively for the Income Fund.
At October 31, 1997, aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost, and aggregate
gross unrealized depreciation for all securities in which there was an excess of
tax cost over value was:
<TABLE>
<CAPTION>
UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION
------------ ------------
<S> <C> <C>
Income Fund................................................................................... $ 239,985 $ 49,714
Equity Fund................................................................................... 6,524,566 1,737,686
</TABLE>
32
<PAGE>
BJB INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
5. SHARES OF BENEFICIAL INTEREST
The Trust may issue an unlimited number of shares of beneficial interest of
each Fund, with a par value of $.001 per share. Changes in outstanding shares of
beneficial interest on the Income Fund and the Equity Fund were as follows:
<TABLE>
<CAPTION>
YEAR ENDED 10/31/97 YEAR ENDED 10/31/96
SHARES AMOUNT SHARES AMOUNT
--------- ----------- -------- -----------
<S> <C> <C> <C> <C>
INCOME FUND:
Sold.................................................................. 287,326 $ 3,378,426 137,746 $ 1,633,687
Issued as reinvestment of dividends................................... 48,186 562,733 72,439 859,744
Redeemed.............................................................. (534,288) (6,205,907) (426,171) (5,023,051)
--------- ----------- -------- -----------
Net decrease.......................................................... (198,776) $(2,264,748) (215,986) $(2,529,620)
--------- ----------- -------- -----------
--------- ----------- -------- -----------
</TABLE>
<TABLE>
<CAPTION>
SHARES AMOUNT SHARES AMOUNT
---------- ----------- -------- -----------
<S> <C> <C> <C> <C>
EQUITY FUND:
Sold................................................................. 2,093,850 $27,215,448 929,622 $10,454,315
Issued as reinvestment of dividends.................................. 104 1,243 -- --
Redeemed............................................................. (468,551) (6,318,210) (204,887) (2,235,835)
---------- ----------- -------- -----------
Net increase......................................................... 1,625,403 $20,898,481 724,735 $ 8,218,480
---------- ----------- -------- -----------
---------- ----------- -------- -----------
</TABLE>
6. ORGANIZATIONAL COSTS
All costs in connection with the organization of the Funds, including the
fees and expenses of registering and qualifying their shares for distribution
under federal and state securities regulations, are being amortized on the
straight-line method over a period of sixty months from July 1, 1992, the date
that the Income Fund commenced operations, and from October 4, 1993, the date
the Equity Fund commenced operations. In the event that any of the initial
shares of the Funds are redeemed during such amortization period, the Funds will
be reimbursed for any unamortized costs in the same proportion as the number of
initial shares outstanding bears to the total numbers of shares outstanding at
the time of redemption.
7. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments
involves special risks and considerations not typically associated with
investing in U.S. companies and the United States government. These risks
include revaluation of currencies and future adverse political and economic
developments. Moreover, securities of many foreign companies and foreign
governments and their markets may be less liquid and their prices more volatile
than those of securities of comparable U.S. companies and the United States
government.
8. CAPITAL LOSS CARRYFORWARD
At October 31, 1997, the Funds had the following available capital loss
carryforwards:
<TABLE>
<CAPTION>
EXPIRING IN EXPIRING IN
2002 2003
----------- -----------
<S> <C> <C>
Income Fund.................................................................................... $ 1,005,868 $ --
Equity Fund.................................................................................... 2,411,612 1,830,291
</TABLE>
33
<PAGE>
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND INDEPENDENT AUDITORS' REPORT
AND BJB INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
[LOGO]
The Board of Trustees
BJB Investment Funds:
We have audited the accompanying statements of assets and liabilities of
BJB Global Income Fund and BJB International Equity Fund, portfolios of BJB
Investment Funds, including the portfolios of investments and schedules of
forward foreign exchange contracts, as of October 31, 1997, and the related
statements of operations for the year then ended, statements of changes in net
assets for each of the years in the two-year period then ended and the financial
highlights for BJB Global Income Fund for each of the years in the five-year
period then ended and for BJB International Equity Fund for each of the years in
the four-year period then ended and the period from October 4, 1993
(commencement of operations) to October 31, 1993. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of October 31, 1997 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
BJB Global Income Fund and BJB International Equity Fund as of October 31, 1997,
and the results of their operations for the year then ended, changes in their
net assets for each of the years in the two-year period then ended and financial
highlights for each of the years or periods indicated in the first paragraph
above, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
December 5, 1997
34
<PAGE>
ANNUAL REPORT
[LOGO]
BJB
Global
Income
Fund
BJB
International
Equity
Fund
October 31, 1997
